Tips for Success?

[MinervaLRenfield]

I've worked with a lot of designers and makers getting started in business, I've also worked as an alternative entrepreneurial consultant. 

My first question is "Do you have a business plan?"  if they say no, I send them back to get started on one.  If you fail to plan, plan to fail.  A good business plan is a very important and useful tool.  It can help you set prices, find out if your product is even marketable, and plan for expansion. 

[Chris in VT]

Ah, the business plan.

One of the main reasons for having a written plan is to obtain financing. Lenders want to see your model for your business.  We don't need financing in this business unless we want to open a factory and go wholesale.

But do we have a plan? Sure. To make our product for the biggest profit as possible. We watch economic trends, and adjust accordingly.

I do shows with professional exhibitors like myself. And over on another forum the idea of a business plan was discussed. So I decided to take an informal survey of the people who do this for a living. I asked no less than 50 exhibitors at 5 shows. Now mind you, these are professionals. many are making over 6 figures per year.

Not one had a formal business plan. I've been in this business for over 30 years, and I've made good money without any written plan.

[MinervaLRenfield]

I disagree that the main reason has to be to obtain financing.  We self financed our company but we still used business plans.  They don't have to be overly formal, something simple or a collection of notes and calculations will do.  You said yourself that you have a plan and you obviously know your product so you've likely done the research that goes with business planning. 

That's not the case all the time though.  When I have alt businesses contract me for help it's -always- the first problem to find they don't have any kind of business plan.  All they had was a "cool" idea and thought they could make money off of it.  These are the most typical problems I hear:

 - "I don't know how much it costs to make, but I figured $20 sounded fair"

 - "It's a popular product but I keep running out of stock"

 - "I didn't budget for "x" problem thought!"

 - "I can't afford to keep the business running"

 - "My mom said they were cute!  I don't know why they aren't selling!"

In most cases having some kind of business plan would have helped these people out from the start.  It's always my first remedy when we're troubleshooting these kinds of problems.  It's quiet eyeing opening to find out that the $20 product you thought was "priced fairly" is actually costing you $30 in materials just to make.   Is your company bleeding money despite awesome sales?  You need to see where your expenses lie.  Every part of your business will have an effect on your pricing and your ability to make sales and you need to be prepared for all possible issues that come up in your line of business.

If you're already an expert in your field, your business planning might be minimal; if you're more "crafty than business" oriented, make a plan.  It won't cost you anything but some time and can help you make a successful venture with your product.  I've seen some people succeed without one in place, but I've seen many more burn out without one.  Even if you're not applying for a loan, it'll help you manage the money and effort you sink into the business.

[CraftyChef]

There is too much emphasis on what things are called. Anyone who is serious about making money has some sort of plan. A budget and a calendar is a plan. If you don't know the costs of your business, or fail to plan inventory and costs for those 6-figure-producing shows in advance, you're pretty screwed pretty fast. There are few people who can keep that all in their head.

[chemical_emily]

I just wanted to say thanks to Chris and everybody who contributed to this thread. I've begun selling my yarn, and Chris's advice to sign up for a fair (which I just read yesterday) made me react like this: Yeah right, like I've got that kind of money laying around. But I'm doing all my homework before jumping in, so I did some looking around, which led to an amazing find: There's one being held literally TWO BLOCKS from my house in two months, which is time to prepare, and the slot was only $20. The sign up deadline was today, and they had a slot left. Kizmet, indeed.

As for business planning goes....I'm lucky. My boyfriend has the math brain, so we made a deal: He does the financial planning and organizing, and I'll do the creative work. He did some math, and came up with some winning numbers. Minimal investment, both time and money wise, and frankly....most of us crafters would be doing this even if we weren't making money, so at least we're getting SOMETHING back. If I could make a career out of traveling and selling my goods....I'd be in heaven.

[Chris in VT]

"...If I could make a career out of traveling and selling my goods....I'd be in heaven..."

That's exactly what my wife and I have been doing since 1994. And part time from 1980 to 1994.

I travel throughout New England and the Mid Atlantic states and do about 40 shows per year. And I love what I do for a living!

There is a down side though. We are at the very front line of the economy. As I have said before, there's nothing at a craft fair anybody needs, so when gasoline goes up, sales go down. When people are nervous about the economy, sales reflect it. So income can be fantastic one year, and minimal the next. It's just part of being self employed.

There are other adjustments too. First, you must work weekends.  And that's tough for a lot of people. My workdays are Tuesday through Sunday. I spend the weekdays making product, and Saturday & Sunday selling. And from labor Day until Thanksgiving, 12 hour days, 7 days a week are the norm. Especially September & October in New England, where people come from all over the world to see the colors.

And spend their money when they have it.

[SewMantra]

This is a wonderful thread, great ideas, thanks to all to commented. Double thanks to the initial poster of the comment, this is something I actually had in mind to ask.

Merci!
Martiel